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    The Hatfield Health Club - Breakeven Point

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    The Hatfield Health Club has asked you to review aspects of its financial condition, specifically its break even point and its use of leverage.

    Management has supplied you with the following company information, along with corresponding data for the industry.

    Hatfield Industry

    Price per Unit $375.00 $525.00
    Unit Sales (Memberships) 500,000 450,000
    Interest expense $3,000,000 $2,000,000
    Variable Costs (% Sales) 50.00% 58.00%
    Fixed Costs $50,000,000 $55,000,000
    Common Shares 8,000,000 7,000,000

    Taxes 36.00% 36.00%

    Use the following headings for your comparison:

    Hatfield Industry

    Sales
    Less: Variable Costs
    Less: Fixed Costs
    EBIT
    Less: Interest Expense
    Earnings before Taxes
    Taxes
    Net Income

    Earnings per Share

    Break-even Point (Units)
    Break-even Point ($)

    Degree of Operating Leverage
    Degree of Financial Leverage
    Degree of Combined Leverage

    Are there any significant financial changes you would suggest to management as a result of this analysis?

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    https://brainmass.com/business/finance/the-hatfield-health-club-breakeven-point-123456

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    The Hatfield Health Club has asked you to review aspects of its financial condition, specifically its break even point and its use of leverage.
    Management has supplied you with the following company information, along with corresponding data for the industry.

    Hatfield Industry

    Price per Unit $375.00 $525.00
    Unit Sales (Memberships) 500,000 450,000
    Interest expense $3,000,000 $2,000,000
    Variable Costs (% Sales) 50.00% 58.00%
    Fixed Costs $50,000,000 $55,000,000
    Common Shares 8,000,000 7,000,000

    Taxes 36.00% 36.00%

    Use the following headings for your comparison:

    Hatfield Industry

    Sales 187,500,000 236,250,000
    Less: ...

    Solution Summary

    This solution is comprised of a detailed calculation and explanation to find the breakeven point, Degree of Operating Leverage, Degree of Financial Leverage, and Degree of Combined Leverage of Hatfield Health Club.

    $2.19

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